Hydropower

In 2020, global net hydropower additions reached 21 GW (+40% from 2019), reversing the five-year trend in growth decline. Almost 60% of the new capacity was commissioned through several large-scale projects in China, the country that has led global hydropower growth since 1996. High deployment in China offset the steep drop in capacity growth in Brazil, which added only 0.2 GW of new hydropower capacity in 2020 compared with its average of 4.6 GW in 2016-2019.  

Although hydropower remains the largest renewable electricity technology by capacity and generation, current capacity growth trends are not sufficient to place it on the Net Zero trajectory. Reaching the 5 870 TWh of electricity generation the scenario envisions for 2030 will require 3% average annual generation growth between 2020 and 2030, or an average 48 GW of new capacity connected to the grid annually through 2030. Although capacity additions are expected to accelerate in upcoming years owing to the many large projects under construction in China, India, Ethiopia and Southeast Asia, achieving the required deployment will take much more effort, especially to streamline permitting and ensure project sustainability.  

In June 2021, the IEA published the Hydropower Special Market Report, its first-ever market report dedicated to hydropower. The report describes the economic and policy environment for hydropower development, addresses challenges and offers recommendations to accelerate growth and maintain existing infrastructure. Furthermore, it presents ten-year capacity and generation forecasts for reservoir, run-of-river and pumped storage projects across the globe, based on bottom-up country- and project-level monitoring.  

With hydropower fleets in many advanced economies dating to the large construction wave of the 1960s to the 1980s, almost 40% (476 GW) of the global fleet is at least 40 years old (the average age is 32). Regional disparities are significant, however, with North America having the oldest (50 years) and China the youngest (15 years). While nearly 70% of plants in North America are 40+ years old, this portion in Europe and Eurasia (mainly Russia) is slightly smaller (60%).  

When hydropower plants are 45-60 years old, major modernisation refurbishments are required to improve their performance and increase their flexibility. In countries where ageing plants provide the majority of renewable electricity, these investments are particularly important to maintain or increase output (usually by 5-10%).  

In addition to renewing major equipment such as turbines and generators, investing in modernisation and digitalisation can significantly increase plant flexibility; make the plant safer; and resolve environmental and social problems such as inadequate drought management and flood control, depending on the country’s regulations. 

In liberalised markets, however, the type and amount of investment depends on whether developers receive enough revenue and remuneration to justify additional capital expenditures, and whether the operational losses expected during the outage/renovation period are acceptable. Advance planning is crucial for hydropower plant refurbishment, as waterflows – in addition to environmental and water regulations – may have changed since the plant first became operational and may not allow the plant to operate at historical levels.  

Outside of China, younger Latin American, Asia-Pacific and African fleets will also require additional investment in plant refurbishment and modernisation in the next decade. Despite being young, several large-scale hydro plants in Africa and developing countries in Asia have been operating below their optimal performance level due to a lack of regular maintenance. Some plants in these regions may therefore require major refurbishment before they reach 40 years of age.